Dividends: Reinvestment Plan & Taxes

Dividends: Reinvestment Plan & Taxes

Dividend Reinvestment Plan

Our plan gives you the opportunity to acquire additional shares of OFG Bancorp
common stock by reinvesting cash dividends or fractional share cash received into
OFG stock. You can join through two different methods:

1. Through Your Brokerage Firm

If you have your OFG stock with a brokerage firm, contact your broker and inquire
on how to reinvest proceeds from dividend distributions. If you are an Oriental
Financial Services brokerage customer or if you would like to become one, call (787)
771-6800.

The Plan is automatic once you join. Our transfer agent, American Stock Transfer
& Trust Co. (AST), will receive dividends paid on your shares as well as all dividends
on any full or fractional shares purchased and held for you under the Plan. Acting
on your behalf, AST will use those funds to buy shares of the Group’s common stock
for you at current market prices. If these funds are not sufficient to buy a full
share, you will be credited with a fractional share computed to three decimal places.
Fractional shares will earn additional dividends for you in the same way as full
shares.

Reinvestment of dividends for your account will begin with the next dividend payable
after receipt of your authorization, provided that your authorization is received
no later than the record date for the dividend. If your authorization is received
after the record date, you will receive that dividend payment in the normal manner,
and your participation in the Plan begins with the next dividend. Once you have
joined, your participation in the Plan continues automatically until you change
it or terminate your plan. If your stock is held at a brokerage firm please contact
them about your reinvestment.

Partial dividend reinvestment

You may designate a partial reinvestment only on shares registered in your name.
Shares held on your behalf in the Plan will be fully reinvested.

Shareholder statement

You will receive a detailed statement of your account showing cash dividends for
each quarter, full and fractional shares purchased, and total shares held for your
account.

Certificates

AST will hold shares purchased for you in safekeeping (book entry form) until termination
of your participation in the Plan. A stock certificate for full shares held for
your account will be issued to you upon request. You will receive cash instead of
a certificate for a fractional share. Proxies sent to you as a record holder of
shares will include the number of shares held for you under the Plan. All shares
held for you under the Plan will be voted in accordance with these proxies.

Are there any costs involved?

OFG will bear all costs for administering the Plan. There is the normal nominal
cost to you for shares purchased with your reinvested dividends at the market price
of the shares.

How do I terminate my participation?

You may terminate your participation at any time by writing to American Stock Transfer
& Trust at the above address. Upon termination a stock certificate will be issued
in your name for the number of full shares then held for your account in the Plan
and will be forwarded to you. Any fractional share at the time of termination will
be converted to cash at the then current market value and a check in the amount
of the proceeds will be sent to you. You can also transfer ownership of your shares
at any time by writing to American Stock Transfer & Trust.

What are the tax consequences?

In general, dividends reinvested under the Plan continue to be taxable for U.S.
and/or Puerto Rico income tax purposes as if you received them in cash. An individual
participant -- whether a Puerto Rico resident or non-resident U.S. citizen -- will
be subject to 15% Puerto Rico tax. See the section below on "Taxes on Puerto Rico
Source Dividends Paid by Puerto Rico Corporations" for more details.

The amount of any brokerage commissions incurred to purchase shares for your Plan
account may not be deducted by you, but should be added to the cost basis of the
stock purchased under the Plan.

The Puerto Rico Internal Revenue Code of 2011, as amended (the “PR Code”),
currently imposes a special 15% income tax on the amount of any dividends paid by
Puerto Rico corporations to individuals (whether or not they are residents of Puerto
Rico), trusts or estates, and a 15% withholding tax rate on such dividend distributions.

Individuals, trusts or estates may elect for such Puerto Rico income tax withholding
not to apply.

●

An individual resident of Puerto Rico who elects out of the special income tax withholding
will be required to include the amount of the dividend as ordinary income and will be subject
to income tax thereon at the regular Puerto Rico income tax rates.

●

A corporation or other business organization organized under Puerto Rico law and with its principal
office and place of business in Puerto Rico may deduct 85% of the dividends that it receives during the
taxable year from Puerto Rico corporations. The deduction may not exceed 85% of the net taxable income of
such corporation or other business organization for such taxable year. The remaining 15% of such dividend
distributions will be subject to the regular income and alternate minimum taxes applicable under the PR Code.

●

United States citizens not residents of Puerto Rico may also elect for the special withholding Puerto Rico
income tax rate not to apply. Notwithstanding the making of this election, a separate 15% withholding Puerto Rico
income tax will be required on the amount of the dividend unless the individual timely files a withholding exemption
certificate to the effect that the individual’s gross income from sources within Puerto Rico during the taxable year
does not exceed $5,000 if individual or married filing jointly taxpayer, or $2,500 if married filing separately. Withholding exemption certificates will
be accepted through Puerto Rico Treasury Department Form AS 2732 (click here),
Withholding Tax Exemption Certificate in the Case of Nonresident Individuals-Citizens of the United States, or any other form issued by the Puerto Rico Treasury
Department for these purposes. If you own your shares directly and not through a brokerage account, email Form AS 2732 to
American Stock Transfer at admin7@amstock.com. If you own your shares in a brokerage account, the form should be submitted
to your broker’s Tax Compliance Department. Check first whether your broker’s Tax Compliance Department can process this request.
In general, and subject to certain conditions and limitations, the Puerto Rico income tax that may be withheld on dividends will
be eligible for a credit against the United States income tax liability of the individual.

●

A foreign corporation that is not engaged in a trade or business in Puerto Rico will be subject to a 10% withholding tax
on dividends paid by Puerto Rico corporations, which will be withheld at source.

Note

The cash dividend paid on OFG common and preferred shares is considered to be a dividend for tax purposes (it is not interest).
These dividends are considered to be "ordinary" and "qualified" because OFG is a domestic US financial holding company (it is not a foreign company)
whose shares are traded on the New York Stock Exchange. Mainland US resident investors receive Puerto Rico Form 480.6C reporting this information for tax purposes.
The information is also reported on IRS Form 1099-Div. Puerto Rico resident investors receive Form 408.6 A or B (Informative Return).

Disclaimer

Whether you are an individual or institutional investor, you should always
consult with your tax advisor as to the tax consequences of your OFG dividends or
your participation in OFG’s Dividend Reinvestment Plan.

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